Georgia Cas. and Sur. Co. v. White

• Citation: 582 So.2d 487
• Parties: GEORGIA CASUALTY AND SURETY COMPANY v. Mary Elizabeth WHITE, as executrix of the Estate of Johnny C. White, deceased. 89-88.
• Decision Date: 31 May 1991
• Court: Alabama Supreme Court

Page 487

582 So.2d 487

GEORGIA CASUALTY AND SURETY COMPANY v. Mary Elizabeth WHITE, as executrix of the Estate of Johnny C. White, deceased.

89-88.

Supreme Court of Alabama.

May 31, 1991.

Robert A. Huffaker of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellant.

Jere L. Beasley and Frank M. Wilson of Beasley, Wilson, Allen, Mendelsohn & Jemison, Montgomery, and Boyd Whigham, Clayton, for appellee.

INGRAM, Justice.

This appeal is from a judgment based on a verdict for $2,000,000 against Georgia Casualty and Surety Company on a "bad faith" claim. The parties have been before this court three times previous to this appeal. See White v. Georgia Casualty & Surety Insurance Co., 520 So.2d 140 (Ala.1987); Ex parte Georgia Casualty & Surety Co., 531 So.2d 838 (Ala.1988); and Ex parte Georgia Casualty & Surety Co., 562 So.2d 314 (Ala.1989).

This action arose from a motor vehicle collision in which Johnny C. White and his wife, Mary Elizabeth White, were injured. On November 4, 1983, Mr. White was driving a gas delivery truck, within the scope of his employment, when his truck was hit by an automobile being driven by an uninsured driver; Mrs. White was a passenger in the truck. The record shows that the uninsured motorist was at fault and that Mr. White was not contributorily negligent.

Mr. White's employer had insurance with Georgia Casualty on 12 trucks, and the uninsured motorist coverage limit on each truck was $10,000 per person. After an investigation, Georgia Casualty determined that the settlement value of the claim was at the limit of $10,000; nevertheless, on or about June 22, 1984, according to the record, Georgia Casualty authorized its agent to settle at or below $7,500. The Whites refused the offer to settle for $7,500, but on September 12, 1984, Mr. and Mrs. White each accepted payment of $10,000.

On October 24, 1984, the Whites filed a complaint alleging multiple claims against multiple defendants. The complaint contained a claim against Georgia Casualty for the amount available to Mr. and Mrs. White under the insurance policies on the 12 trucks ($120,000 each) less the amount paid to each on September 12, 1984 ($10,000 each), for a total of $110,000 each.

The Whites filed amendments to their complaint on March 28, 1985, and on May 2, 1985, adding claims of fraudulent misrepresentation. The first amended complaint, filed on March 28, 1985, alleged that Georgia Casualty had fraudulently misrepresented that the maximum amount that could be paid to each of the Whites for uninsured motorist benefits was $10,000, the limit per person on the policy covering the truck Mr. White was driving at the time of the accident instead of $120,000, the total available per person if the policies, covering all 12 trucks in Mr. White's employer's fleet, were "stacked" (12 X $10,000). In the second amended complaint, filed on May 2, 1985, the Whites averred that agents and employees of Georgia Casualty had conspired to deny workmen's compensation coverage to Mr. White in order to defraud him of money due under the workmen's compensation policy as well as to prevent Mr. White from obtaining the benefits of stacking. Georgia Casualty filed answers denying these allegations.

On April 30, 1985, Georgia Casualty filed a motion for summary judgment as to all claims. On December 19, 1985, the trial court entered a summary judgment for Georgia Casualty, holding that the Whites were "insureds of the second class" and, therefore, were not entitled to stack the uninsured motorist coverage. The trial court further held that because the Whites had been paid $10,000 each, Georgia Casualty was not further liable. The Whites appealed that summary judgment.

On July 2, 1987, in White v. Georgia Casualty & Surety Co., 520 So.2d 140 (Ala.1988) (hereinafter White I ), this Court held that Mr. White was an insured of the first class and, therefore, was entitled to stack the coverage on the other vehicles insured by Georgia Casualty under the fleet policy owned by Mr. White's employer. However, this Court held that Mrs. White was an insured of the second class and was not entitled to stack coverage. Her recovery was limited to the $10,000 limit of primary coverage as stated in the policy. The Whites' application for rehearing was denied on February 12, 1988, and the certificate of judgment was issued on March 1, 1988.

Mr. White died in October 1987, during the pendency of the application for rehearing in White I. On February 3, 1988, Mrs. White filed a motion to substitute herself as the personal representative of the estate of Mr. White.

The opinion in White I addressed only the "entitlement to stack" issue, leaving uncertainty as to any appellate disposition of the two fraud claims that had been alleged in the first and second amended complaints. One claim alleged a fraudulent misrepresentation of the amount recoverable under the uninsured motorist policy, i.e., a representation that Mr. White was not entitled to stack the policies. The other claim alleged fraud in conspiring to deny workmen's compensation benefits. Georgia Casualty petitioned this Court for a writ of mandamus, contending that neither of the two fraud claims survived this Court's July 1987 decision in White I. On August 26, 1988, in Ex parte Georgia Casualty & Surety Co., 531 So.2d 838 (Ala.1988) (White II ), this Court denied the petition and ruled that the first fraud claim, alleging misrepresentations concerning entitlement to stack coverage, was not barred by the decision in White I and could be maintained. However, the Court went on to hold that the Whites' failure to argue the second fraud claim on appeal, concerning the denial of the workmen's compensation coverage, constituted a waiver and abandonment of that claim. After this Court's decision in White II, Mrs. White, as executrix of Mr. White's estate, had two claims pending before the trial court, the claim for the amount due under the stacked policies ($110,000) and the claim alleging the misrepresentation of Mr. White's entitlement to stack.

On September 28, 1988, Georgia Casualty moved for summary judgment on the remaining fraud claim alleging a misrepresentation of Mr. White's entitlement to stack the uninsured motorist policies. Two days later, on September 30, 1988, Mrs. White, as representative of Mr. White's estate, moved for summary judgment with respect to the claim for $110,000 (12 vehicles X $10,000 per vehicle, less the $10,000 previously paid to Mr. White) for uninsured motorist benefits, citing this Court's decision in White I.

On December 21, 1988, before the trial court had ruled on the motions for summary judgment, Mrs. White, as the representative of Mr. White's estate, moved to amend her complaint a third time. She made two separate bad faith claims. First she alleged that Georgia Casualty had wrongfully tried to limit its liability by giving its agent authority to settle for only $7,500, when, at that time, June 24, 1984, it had admitted that the claim had a settlement value of $10,000. Also, she alleged that Georgia Casualty, in bad faith, had refused to pay or settle the claim for the amount due ($110,000) after the decision of White I and had done so with no legitimate or arguable reason for its refusal.

On December 28, 1988, the trial court entered separate orders on the summary judgment motions, granting Mrs. White's summary judgment motion and awarding her $110,000 in damages on the uninsured motorist claim and granting Georgia Casualty's motion as to the remaining fraud claim regarding the alleged misrepresentation of Mr. White's entitlement to stack. The fraud claim relating to the conspiracy to deny workmen's compensation benefits had been dismissed earlier. No notice of appeal was filed, and the judgment for $110,000, including prejudgment interest, was paid in January 1989. Neither party sought appellate review of the summary judgments. The case then proceeded to trial on the two bad faith claims alleged in the third amendment to the complaint, the claim of a bad faith offer to settle for $7,500, and the claim of a bad faith refusal to pay $110,000 for several months after White I.

After a trial on the merits, the jury returned a general verdict for $2,000,000 in favor of the estate of Mr. White on the bad faith claims, and the trial court entered its judgment thereon. Georgia Casualty moved for a judgment notwithstanding the verdict or, alternatively, for a new trial, or for remittitur. After a hearing in accordance with Hammond v. City of Gadsden, 493 So.2d 1374 (Ala.1986), to test Georgia Casualty's assertion of "excessiveness of the verdict," the trial court denied Georgia Casualty's postjudgment motions, and Georgia Casualty brought the instant appeal.

Georgia Casualty raises the following issues: (1) whether this cause of action for bad faith survived Mr. White's death; (2) whether there was sufficient evidence to support the jury verdict; (3) whether the trial court erred in failing to grant a mistrial after counsel for Mrs. White made reference to offers of settlement; and (4) whether the jury verdict of $2,000,000 was excessive.

Survival Issue

Mrs. White alleged two incidents of bad faith in the third amendment to the complaint. The first was Georgia Casualty's alleged bad faith in authorizing its agent to settle for only $7,500 when it had at that time recognized the settlement value as $10,000. This claim is hereinafter referred to as the bad-faith-offer-to-settle claim. The second incident was Georgia Casualty's refusal to pay the limits of the stacked policies after this Court's decision in White I. This claim is hereinafter referred to as the bad-faith-refusal-to-pay claim. These two incidents will be discussed separately as they relate to the issue of survival.

Survival Generally

Georgia Casualty argues that the bad faith claims are "causes of action" and, therefore, that they do not survive the death of Mr. White. This Court has...